Is consumer really an-undisputed ‘monarch’ in a capitalistic economy? Are there any limitations to his powers? To what extent can this consumer-king extend his authority to direct the economic activities? These are the points to be analyzed to find out how far the consumer is powerful as imagined.
The following are some of the limitations of consumer’s sovereignty:
1. Size of money-income
The consumer has to pay anything demanded in the market and this depends on the income of the consumer. When the income is very much limited, the consumer cannot express his demand in a bigger way or in a variety of ways. The purchasing power of the consumer stands as a limit to the goods purchased by him and if a majority of the consumers are poor, consumer’s sovereignty becomes a myth.
Strictly, in a free capitalistic economy, it is not a consumer’s sovereignty, but a rich man’s sovereignty that would prevail. Only rich people who can afford to buy will demand the commodities and production will be carried on to cater the wishes of the wealthy group.
2. Productive powers of the economy
The wishes of the consumer get restricted due to limited productive powers of the economy and also the level of technology. The consumer may desire anything and prepare to pay any amount. If the economy does not have the necessary natural resources and technology to produce that commodity, the sovereignty of the consumer gets limited. In a poorly developed or backward economy, the consumer cannot get anything as the productive powers of the economy is much limited, whereas in advanced economies, the consumers may desire many commodities.
3. Monopoly and Imperfect markets
The consumer enjoys full freedom and dictates production only in perfectly competitive market conditions. But in the practical world, markets are not perfect and free. The imperfections of the market restrict the position of the consumer. If it is monopoly, the consumer has no will to exercise regarding the choice of goods and he is at the mercy of the producer.
The consumer has to pay whatever price is demanded by the monopolist. So under monopolistic conditions, the consumer is not a king but a slave. Existence of monopoly and imperfect market seriously affect the sovereignty of the consumer.
Advertisement, publicity and propaganda exercise powerful influence on consumer’s tastes and preferences. In modern days, competing firms take to aggressive advertisement through various media like press, screen, radio and TV. Further, many dynamic techniques are adopted in marketing, salesmanship, etc. By means of these effective and persistent advertisements, the producers fairly come out successful in shaping the choice of the consumer.
The consumer unconsciously falls a victim to advertisement and dynamic salesmanship, buy the commodity which may be different from his natural choice. Inventions of new commodities takes place and producers create demand for those products by advertisement. This high pressure advertisement results, indirectly, in curtailing the freedom of consumer’s choice and his sovereignty. In the context of high pressure advertisement, the Judgment of the consumer may not be free.
But Benham opines that there is not much force in this argument.
Many advertisements advise the consumer to buy different products. They do not take away the sovereignty of the consumer. In spite of advertisement, the consumer is free to exercise his choice. A king may be advised by his ministers and by accepting the advice the king does not lose his sovereignty.
“In any case, a monarch may be advised and cajoled, as to some of his activities even by his slaves, but he remains a monarch none the less”.
Even though there is point in this argument, the fact remains that the consumer is largely influenced by advertisement and his free choice gets altered.
5. Restriction by the Government
Government’s restriction on production and sale will hinder the sovereignty of the consumer. Modern Government, whatever may be the type of economy, make too many restrictions on production and consumption of certain commodities. To that extent the freedom of the consumer gets restricted. Moreover various types of controls are imposed on the quantity and quality and price of’ products and in some cases production may be altogether prohibited. (example: alcohol, opium, narcotic drugs, etc).
Because of the government intervention, the choice of the consumer is restricted. Further, government being the biggest consumer now-a-days, the bulk of the commodity produced will pass on to government works and the civilians will get only limited quantity.
During wartime, even in capitalistic countries rationing of commodities is introduced and all essential commodities like food stuffs, fuel, cloth, etc., are given only in ‘fixed’ quantities. The ‘Consumer-King’ should stand in a long queue surrendering all his sovereignty.
6. Fashions, Habits and Customs
Habits, customs and fashions drive the consumer to demand a particular commodity whether he deliberately wishes it or not. The consumer’s choice is strongly influenced by the prevailing fashion, tastes, etc. In this respect the freedom of the consumer is affected.
7. Tax Structure
The prevailing tax structure in the economy may adversely affect the consumption of the consumer and his choice may get restricted. This point is only a corollary from the two points already stated, viz., size of money-income and restriction by government.
Heavy income tax imposed on the consumer will reduce his size of income and his purchasing power will be less and he cannot exercise free choice with reduced income. Secondly commodity tax would increase the price of commodities and the consumer may have to restrict his consumption of that commodity. So, in both ways consumer’s choice will be curtailed due to taxation.
Consumer’s Sovereignty is a myth
It is clear that there are many limitations on the sovereignty of the consumer. He is not all powerful even in a capitalistic economy. Apparently he may seem to enjoy sovereign powers in normal times, but very frequently his sovereignty reduces into nothing. Socialists who attack capitalism tooth and nail, decry that consumer’s sovereignty is a myth. They contend that the consumer is exploited by monopolistic capitalists and instead of being sovereign, he is reduced to the position of a slave, a milch-cow in the hands of producers.
Consumer’s Sovereignty is not desirable
Socialists further argue that even taking it for granted that there is consumer’s sovereignty, it is not desirable to have such a sovereignty. It is not conducive to the larger interest of the society.
Consumers, according to socialists, are irrational, emotional and quite unfit and unqualified to make correct choices. If they are allowed to exercise, their free will, it may lead to wrong and uneconomic utilization of resources. Socialists oppose full freedom to consumers on the assumption that the consumers are not only irrational, but they do not know their own interests.
Allowing full freedom in choices, the consumers are likely to injure themselves in the process and it is the State which should direct consumption and production, as it knows the interest of the consumer better. This is a very extreme and pessimistic view of socialists, reflecting the poor opinion of them about the consumers. May be the consumer is a poor judge when faced with a bewildering variety of goods which are close substitutes and perhaps he may make an irrational choice; but in normal circumstances, the consumer will exercise his choice correctly, as he is rational. This is more so if it is a question of choosing the necessaries of life.
The consumer will exercise his choice correctly in food, clothing and other normal amenities of life. He may become irrational in cases of drugs, alcoholic liquor and commodities which are called luxuries and semi-luxuries and choose in the wrong way. In these areas, the State can direct the consumer to be rational in choosing for consumption.
To conclude the consumer’s power is not absolute. He is neither a sovereign nor a slave. There are some limitations in exercising the choice by the consumer. He is a source of profit and his wishes cannot be altogether ignored. It pays a producer to humor and flatter a consumer. He may not be a sovereign; but he is like a heroine to be wooed. Progress depends on alert and responsive consumer and prudent producer.